The Property Order

Has anyone ever pondered the apparent mystery of why, in the U.S., there has been such movement of population over the past half century from the northeast to the southwest? At first observation, it would seem that the opposite should be the case. The northeastern U.S. has abundant water and rainfall, fertile soil and, no earthquakes or large-scale fires while the southwest is the opposite. The northeast is also positioned closer to international destinations in terms of historic travel and trade. Yet, the population has shifted dramatically to the southwest.

Today, I would like to present my conclusion on this question and it has nothing to do with the sun. When people settle in a new area, one of the most important things that they seek out is a water supply and the first houses and buildings in the new settlement are inevitably built near the water. The easiest and least expensive homes to construct are those of wood frame. It is usually only when the settlement grows into a city and lumber becomes scarce and more expensive that developers begin building homes primarily out of brick.

In cities across the U.S. except in the southwest, it is easy to see this pattern today. Houses in the center of the city will be built primarily of wood. Outside that, there will be a ring of houses constructed mostly of brick. Finally, there will be the ring of postwar suburbs outside. This pattern does not always apply to the older and more densely populated areas in which wooden structures from two hundred years ago have not survived and building was more likely to be done with stone, rather than scarce wood, from the beginning.

A basic fact of real estate is that waterfront property is worth more than property that is not near or on water. The problem that we run into with a growing city is that the waterfront property would be greatly increasing in value as the city grows except that it is occupied by the older homes that were among the first built in the settlement when it was new. These homes near the water are, by this point, much less valuable than the homes that are being built further out, near the edge of the growing city.

This, then is the great mismatch of what I will call the property order. The best homes are built on land that is less than the best, in terms of location, while what would be the best land is occupied by some of the least expensive homes. This mismatch in the property order lowers the overall value of all the property in the city, which would be at it's peak when the value of homes matches the value of their land without the home. What we basically have is the economic order of the Twenty-First Century stuck with much of the property order of the Nineteenth Century.

The only way around this is to knock vast numbers of older homes down. The original wood frame homes were probably not built with the idea of lasting more than a century and there is only so much that refurbishing can do. Knocking down and building anew is the only way to maximize the property order efficiency.

The best example of this is the massive renovation of Paris in the Nineteenth Century. It encountered much resistance. But without it, Paris certainly would not be the city that it is today. See "Baron Hausmann" or "Hausmann's Renovation Of Paris" on http://www.wikipedia.com/

Now back to the mass movement of population to America's southwest over the past fifty years or so. Even with the mass production of air conditioners, the area is dry and dusty and hot. The American Southwest may have sunshine and it certainly has a beauty all it's own. But neither of these is the reason that it has boomed.

It is because the southwest was unencumbered by the property order prevalent in the rest of the country and so it gave us the opportunity to start the property order over again. The same is true to some extent of Florida because before the advent of air conditioning, it was too hot and humid to be as populated as it is now.